Answer to Question #72504 in Finance for jones
2. A project has expected risky cash flows of $90, 000 in perpetuity while the certainty equivalent cash flows are $60, 000. The risk free rate is 10%. What is the risk adjusted rate of return on the risky cash flows?
3. Should an investor invest in this project if the initial cost is $650, 000?
4. What would be the internal rate of return if the cost of the project was $600, 000?
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